$3.7m to Japan firm after axing Lanka LRT project

COLOMBO: Sri Lanka has agreed to pay about $3.7 million (about billion rupees) to a consultancy led by Japanese firms, after a light rail transit (LRT) project was cancelled suddenly, the auditor general has said.

Sri Lanka’s former President Gotabaya Rajapaksa suddenly cancelled an LRT project which was to be financed through a low interest loan from the Japan International Co-operation Agency, damaging relations between the two countries.

A claim for compensation was submitted by the OCG joint venture made up of Oriental Consultants Global Co Ltd, Japan International Consultants for Transportation Co Ltd; Chodai Co Ltd; Nippon Koei Co Ltd; and Sri Lanka’s Consulting Engineers and Architects Associated (Pvt) Ltd.

A negotiation committee had been appointed by the Cabinet to look into the claim.

The cabinet had approved on November 2022 to pay 2,930,307 million US dollars for work already done, 492,749 dollars costs including terminating staff of the OCG venture, according to comments made by Sri Lanka’s Auditor General in annual accounts of the Treasury.

Another 3.73 million rupees would be paid relating to a delay in re-imbursing value added tax.